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Topic: Is it too late [bitcoin]? (Read 81824 times)

Are you sure about that? Most financial institutions do not actually hold large quantities of cash at any given time, it's digitally recorded debt that gets swapped back and forth all over the place. It's not possible for someone to break into the bank and cart away all of the money. It seems like any institution holding bitcoin would need to actually have the bitcoin, and therefore be vulnerable to this concern wouldn't it?

Most data breaches do not consist of heist style robberies where millions of dollars are exfiltrated (as you noted). It is the payment information and PII that is exfiltrated. This often happens without the companies knowing. The fraud/theft then happens afterward in the form of unauthorized transactions. Yes, financial organizations holding bitcoin would need to store that bitcoin, but the positive trade off is that you don't have aftermarket fraud taking place in the form of unauthorized transactions. On top of that, if bitcoin is stolen, it is noticeable immediately after the funds are withdrawn as opposed to having a breach remain dormant for months or years on end while consumer data is being stolen.

Report back when I can get FDIC backed Bitcoin accounts to store my crap in. None of the Bitcoin infrastructure has ever been tested against a bank run. Well, actually Mt. Gox did and it failed miserably.

FDIC does not insure against fraud though (which is what the discussion was about). I agree that FDIC insurance would be valuable in the event of institutional insolvency. But, again, that is not a critique against bitcoin, that's a critique against the institutions around it. We may very well see a day where FDIC/NCUA type insurances are extended to bitcoin accounts as well.

I'm just curious, when you have your seed stamped on steel (it's really weird to say that btw) in different geographic locations, can you still use your bitcoins easily, i.e. do you need to find 2 of your 3 seeds every time you want to buy something with your bitcoin, or buy more bitcoins? If so that is inconvenient. If not then please educate this ignoramus.

That's my cold storage vault. That very secure wallet contains 99% of my bitcoin. I rarely ever withdraw from it (maybe once a month) and I can still send money to it any time without needing the seed. The seed is only needed for spending. I chose to stamp it on steel so that it is better protected against fire, corrosion, electricity, and water (compared to just storing it on paper in a fire safe, for example). For spending, I just use the online wallet through Coinbase where I keep small amounts of funds (<$1000) at any given time. I have a bitcoin debit card tied to that wallet that allows me to spend that bitcoin anywhere VISA is accepted without any transaction fees.

Yeah, what kind of steel did you use? Steel, even many "stainless" steels varieties are still prone to rust, pitting, and corrosion over long durations and poor environmental conditions... Its why they don't use it for coins, at least not in the U.S.

Are you sure about that? Most financial institutions do not actually hold large quantities of cash at any given time, it's digitally recorded debt that gets swapped back and forth all over the place. It's not possible for someone to break into the bank and cart away all of the money. It seems like any institution holding bitcoin would need to actually have the bitcoin, and therefore be vulnerable to this concern wouldn't it?

Most data breaches do not consist of heist style robberies where millions of dollars are exfiltrated (as you noted). It is the payment information and PII that is exfiltrated. This often happens without the companies knowing. The fraud/theft then happens afterward in the form of unauthorized transactions. Yes, financial organizations holding bitcoin would need to store that bitcoin, but the positive trade off is that you don't have aftermarket fraud taking place in the form of unauthorized transactions. On top of that, if bitcoin is stolen, it is noticeable immediately after the funds are withdrawn as opposed to having a breach remain dormant for months or years on end while consumer data is being stolen.

Agreed mostly.

The difference is that data breaches do not really financially impact end users under our current banking system. Data breaches will directly impact end users who have bitcoin held somewhere. So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

The difference is that data breaches do not really financially impact end users under our current banking system. Data breaches will directly impact end users who have bitcoin held somewhere. So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

Again, that is a critique against the institutions providing services for costumers, not against bitcoin. Data breaches with most traditional financial institutions do not impact the end user because most of those institutions value their business and purchase insurance so that if a breach were to occur, it doesn't have to impact their customers.

Case in point, Coinbase is insured in this same way against data breaches as it states on their website:

"Digital Currency

All digital currency that Coinbase holds online is fully insured. This means that if Coinbase were to suffer a breach of its online storage, the insurance policy would pay out to cover any customer funds lost as a result.

The insurance policy covers any losses resulting from a breach of Coinbase’s physical security, cyber security, or by employee theft.

Coinbase holds less than 2% of customer funds online. The rest is held in offline storage."

The difference is that data breaches do not really financially impact end users under our current banking system. Data breaches will directly impact end users who have bitcoin held somewhere. So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

Again, that is a critique against the institutions providing services for costumers, not against bitcoin. Data breaches with most traditional financial institutions do not impact the end user because most of those institutions value their business and purchase insurance so that if a breach were to occur, it doesn't have to impact their customers.

Case in point, Coinbase is insured in this same way against data breaches as it states on their website:

"Digital Currency

All digital currency that Coinbase holds online is fully insured. This means that if Coinbase were to suffer a breach of its online storage, the insurance policy would pay out to cover any customer funds lost as a result.

The insurance policy covers any losses resulting from a breach of Coinbase’s physical security, cyber security, or by employee theft.

Coinbase holds less than 2% of customer funds online. The rest is held in offline storage."

No insurance covering acts of God? Destruction from acts of war? Not trying to gin up a religious debate. Just curious. I'm trying to read that language the way the insurance adjuster might.

I mean, insurance companies aren't filthy rich because they pay out on every claim, right?

I read it as meaning only 2% of the bitcoins held are insured. Since it only refers to insurance for bitcoins held "online" and only 2% is held online. So, I'm guessing the other 98% held offline is uninsured?

So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

Heck, most of our money is already moved around digitally. Why stop short of crypto?

Even the federal reserve (and other central banks) have kicked that idea around. They don't speak highly of bitcoin, but in my mind, a federal reserve issued fiat-friendly crypto, eventually, is as near a certainty as the sun coming up tomorrow. Hello FDIC insurance. Settle your tax bill with the IRS using crypto, anyone? ;)

Volatility and valuation will never be problems searching for solutions. No price discovery needed.

Acceptance by merchants, at least in the USA, will not be optional. Acceptance will be required by law, unless specifically exempted. Then again, maybe credit card companies will step up and solve that problem with existing partnerships and infrastructure. Either way, problem solved.

I don't seriously expect any central bank to embrace a "global" crypto currency, such as bitcoin. That would cede too much authority over monetary policy, and I just can't imagine congress authorizing that. I'll let the lawyer-inclined members debate whether a constitutional amendment would be needed for that.

So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

I think it will look very different to anything around now. The whole model whereby the inventors, their mates and early adopters end up owning a significant percentage of the total supply, is unnecessary, overtly scamish and detrimental to adoption efforts. I think if there turns out to be any benefits to any of the concepts over current banking solutions, they will be integrated into the backend of existing institutions and the frontend of interacting with day-to-day finances will not change at all for the individual. The average person doesn't know or care about cryptography, it will be managed behind the scenes. Any actually successful 'crypto currency' in terms of actual daily use will most likely be created 'above board' by existing banking institutions.

The notion that such a thing can only be invented/created through an evolutionary 'free market' free-for-all meme war that we are currently seeing is a naive libertarian belief/desire. I think there's a chance that it ends up going so badly that the whole notion will become something that culture will look upon in the same way as pyramid schemes, MLM, beanie babies, etc, which could really slow down or kill development/investment/interest/adoption of the ideas.

I've said it before and I'll say it again, I have yet to see any proof of the existing application of cryptocurrencies/blockchain (that haven't been bastardised into being basically databases anyway) that leads to an undeniable competitive advantage that means businesses need to adopt it or risk being left behind. The overwhelming bulk (if not literally all) of journalism you see reporting on 'adoption' are companies doing preliminary investigation, experimentation, or just signing up to lists (ethereum foundation) that are essentially them saying 'sure, we'll use your technology if it ever becomes practical and advantageous' (basically, hedging their bets). Or the name 'blockchain' being applied to things which are obviously not blockchain as it espoused by the crypto community (eg the recent ASX news).

Bitcoin. A "currency" that no one uses to buy stuff with. Backed by nothing but the faith of a small number of American millennials and a lot of rich Chinese trying to smuggle money out of their country. It's all about smuggling and speculative "investing."

Reminds me more of a 1999 profitless ".com" than an investment (plus the smuggling).

It's in full mania mode now, so the end game (collapse) is likely near.

Though, as with all manias, a certain number of fools who had not heard of Bitcoin before a week ago, will pile on at the end ("Greater Fool" theory of investing) and lose nearly everything they invest.

It's in full mania mode now, so the end game (collapse) is likely near.

Don't forget the old saying that the market can stay irrational longer than you can stay solvent.

My typical gauge for determining if a correction/collapse is coming is to watch and see if the particular investment is discussed on Christmas day at the gathering of my extended family.* If bitcoin is not discussed two weeks from now, then my prediction is that bitcoin is good until 2019.

**I purposefully won't be bringing up the topic to see if someone else does.

I have some thoughts on bitcoin. First it is a currency, but no one here that I have seen (just skimming through the posts, if I missed one) has used it as such. In the press, there hasn't been any discussion on what large numbers of people are purchasing with it. I am sure it has happened, "businesses accept it", though at what level I am not sure. As someone posted here, how would a business price something in bitcoin with such swings in volatility?

Secondly, why would anyone use bitcoin as opposed to dollars or any other currency? The plus is anonymity. That is a good thing only if you are trying to hide what you are doing. I bet the Norks, Chinese, and Russians love it. For the average person, is hiding what you are doing that important day-to-day?

Finally, "bitcoin is going up!" at a rocket rate. Reading the posts here, and reviewing the press, everyone seems to be trying to lasso the rocket to get rich quick (or even just to make a little extra). I believe that will work as long as people keep pumping money into the system buying into the dream. When that slows, or when the big players cash out......

It might be the way of the future, but at some point governments are going to get involved and heavily regulate it. There was post buried in here that less than 2% is insured by coinbase. There is no protection there, so if someone boosts your wallet they will be zero help.

In short, it just looks like a gambling frenzy to me; wrapped up in financial terms. That said if you bought bitcoin when it was 1$, you'd be sitting pretty. Now that is over $10000, it has to climb to even more super-highs to realize more modest gains.

There was post buried in here that less than 2% is insured by coinbase. There is no protection there, so if someone boosts your wallet they will be zero help.

The 2% is the amount of crypto Coinbase says they keep in online storage. They say rest is kept in offline storage. They claim all crypto funds are fully insured from theft on their side. Who knows if it is or not. They specifically say no funds will be covered for someone hacking an individual account. I would not keep anything in Coinbase or any other exchange except that which is needed to trade.

I have some thoughts on bitcoin. First it is a currency, but no one here that I have seen (just skimming through the posts, if I missed one) has used it as such. In the press, there hasn't been any discussion on what large numbers of people are purchasing with it. I am sure it has happened, "businesses accept it", though at what level I am not sure. As someone posted here, how would a business price something in bitcoin with such swings in volatility?

Secondly, why would anyone use bitcoin as opposed to dollars or any other currency? The plus is anonymity. That is a good thing only if you are trying to hide what you are doing. I bet the Norks, Chinese, and Russians love it. For the average person, is hiding what you are doing that important day-to-day?

*Waves* Hi there! I've used bitcoin to actually pay for goods online.

I wasn't trying to be anonymous,* but the very first time I bought bitcoin I was ordering something from India, from a company I hadn't heard of before, and I didn't feel at all comfortable giving them my credit card info and setting up a bank wire for a $60 purchase seemed ridiculous.

Like paypal, the nice thing about using bitcoin to process payments is that it's "push" driven, rather than "pull" driven, so you can do business with someone without having to trust them to A) not decide to bill you again later without your consent, B) use appropriate data security so no one else can steal your credit card info and run around buying all sorts of stuff on your account. Unlike paypal, transactions have the potential be be very low cost, and you don't have to worry about paypal draining bank accounts you have linked to you paypal account if someone does a chargeback (or various otherhorror stories). At the time, transaction fees were on the order of $0.05, and the whole thing went quite smoothly.

Right now the fees are ridiculously high, and I agree with you that the rapid run up in price has brought in a lot of people who are buying bitcoin in the hopes of making a lot of money rather than because they're actually needing to use it to buy and sell things.

*And bitcoin is not a particularly good way to stay anonymous. If you were actually getting into the drug trade I assume you'd pick a currency like monero instead.

Logged

surfhb

I have some thoughts on bitcoin. First it is a currency, but no one here that I have seen (just skimming through the posts, if I missed one) has used it as such. In the press, there hasn't been any discussion on what large numbers of people are purchasing with it. I am sure it has happened, "businesses accept it", though at what level I am not sure. As someone posted here, how would a business price something in bitcoin with such swings in volatility?

Secondly, why would anyone use bitcoin as opposed to dollars or any other currency? The plus is anonymity. That is a good thing only if you are trying to hide what you are doing. I bet the Norks, Chinese, and Russians love it. For the average person, is hiding what you are doing that important day-to-day?

*Waves* Hi there! I've used bitcoin to actually pay for goods online.

I wasn't trying to be anonymous,* but the very first time I bought bitcoin I was ordering something from India, from a company I hadn't heard of before, and I didn't feel at all comfortable giving them my credit card info and setting up a bank wire for a $60 purchase seemed ridiculous.

Like paypal, the nice thing about using bitcoin to process payments is that it's "push" driven, rather than "pull" driven, so you can do business with someone without having to trust them to A) not decide to bill you again later without your consent, B) use appropriate data security so no one else can steal your credit card info and run around buying all sorts of stuff on your account. Unlike paypal, transactions have the potential be be very low cost, and you don't have to worry about paypal draining bank accounts you have linked to you paypal account if someone does a chargeback (or various otherhorror stories). At the time, transaction fees were on the order of $0.05, and the whole thing went quite smoothly.

Right now the fees are ridiculously high, and I agree with you that the rapid run up in price has brought in a lot of people who are buying bitcoin in the hopes of making a lot of money rather than because they're actually needing to use it to buy and sell things.

*And bitcoin is not a particularly good way to stay anonymous. If you were actually getting into the drug trade I assume you'd pick a currency like monero instead.

Not a very good reason to buy a product with bitcoin IMO. First off you are not accountable if someone steals your account and secondly, your product is insured if you have an issue with the vendor.

BTW....NO ONE should ever link their bank account to anything online OR even use one for purchases. I learned that lesson before. Use a credit card!!! Its a no brainer. No way in hell I'm going to give a vendor my hard earned money within an anonymous environment!

Not a very good reason to buy a product with bitcoin IMO. First off you are not accountable if someone steals your account and secondly, your product is insured if you have an issue with the vendor.

BTW....NO ONE should ever link their bank account to anything online OR even use one for purchases. I learned that lesson before. Use a credit card!!! Its a no brainer. No way in hell I'm going to give a vendor my hard earned money within an anonymous environment!

I definitely agree with you that credit card > bank account for online purchases.

In my observation cleaning up the mess left behind by credit card/identity theft is a huge pain and hassle even if the loses are ultimately covered by someone other than you. I'd much rather work with "push" based methods for online payments instead of "pull" and never have to go through the hassle in the first place. I acknowledge other people with weight the same pros and cons and come to the opposite conclusion.

Anyway, I'm not trying to convince you to replace your credit card spending with bitcoin spending. But if the question is whether anyone in this thread has used bitcoin to make purchases, the answer is "yes."

It's in full mania mode now, so the end game (collapse) is likely near.

Don't forget the old saying that the market can stay irrational longer than you can stay solvent.

My typical gauge for determining if a correction/collapse is coming is to watch and see if the particular investment is discussed on Christmas day at the gathering of my extended family.* If bitcoin is not discussed two weeks from now, then my prediction is that bitcoin is good until 2019.

**I purposefully won't be bringing up the topic to see if someone else does.

Oh, this old bubble indicator is already flashing like crazy for me personally. Besides being a frequent topic of conversation amongst those with some knowledge of it, two of my older friends who have absolutely zero interest in new technology and/or serious investments have independently registered new Coinbase accounts in the past week. One jumped right into the craze and just bought some BTC despite my warning that they're playing with fire. Neither has any interest in cryptocurrency other than to try to sell it to a greater fool. What strikes me as really odd is that these are among the last people I would have expected to jump on the crypto bandwagon. These two happened to ask me my thoughts about it, assuming that I had some knowledge of it and then they largely viewed my skepticism with their own (uninformed) skepticism about my views. I can't imagine how many millions more are doing the same and I also can't imagine it'll end well for many.

For the average person, is hiding what you are doing that important day-to-day?

You may not value privacy, but alot of people do. Use-cases would include looking up embarassing medical conditions, freedom of expression vs self-censorship and chilling effects, entertainment derived from tipping an online stripper, purchasing file download software for foot fetish, debating political and religious views without persecution, protection from stalking or other effects if you are a celebrity or well-known personality, and other situations protecting identity or sensitive data that warrants confidentiality.

Forgive me if I'm wrong, but isn't that the complete opposite scenario of most bitcoin investors at the moment? Few people have only a couple hundred dollars of bitcoin, most appear to be hoarding large sums with the intent to use as an investment rather than for any transactions that can be carried out.

The original premise was that bitcoin would have use-cases that would compel people to acquire it to use; and this would therefore escalate demand and value. However, rising use-cases and transactions have shifted to newer, superior crypto. My prediction is that by 2019, bitcoin's market dominance will dip below 50% (it's currently 62.4% and one year ago it was 86%). There will be crypto that will outperform bitcoin; and a few of these crypto have the potential for a huge breakout due to true onchain scalability, mass adoption, and compelling use-cases (superior remittance system, access to online financial services, a platform that allows payment networks to instantly settle and various units of value to be traded with each other, etc).

For argument's sake, lets call it a Fad (possibly even a pyramid scheme)... It has value but for the most part you are now seeing Bitcoin everywhere in the news. As of Monday (yesterday), it is now being traded on the futures market. 2014 the US IRS said gains were taxable so the government makes their cut on the profits. Every time a chain is completed via mining a little more bitcoin makes itself into the market (It costs money, electricity, and time to produce).

That aside it is limited. Unlike currency printing there is a finite amount. Even with the decimal points the lowest denomination is a satoshi (0.00000001 bitcoin). If one satoshi becomes worth 1 cent ($.01) then one bitcoin becomes worth $1M. It will take 100 years before all the bitcoin is completely mined. By design more cannot be created.

"The combined value of the US paper currency printed each day is thought to be about $900 million"

Pros:Governments cannot control the value of bitcoin. They can try to regulate the currency exchanges but hundreds if not thousands of computers worldwide agree to each new block entered into the Bitchain. Kind of reminds me of how governments try to take down WikiLeaks. The issue is everyone started mirroring the site. Causing the site to always be up.

If you don't trust your country's banking system (no FDIC/SPIC), the current government (mass corruption), local currency (over inflated/worthless), or a million other reasons then the global cryptocurrency has value.

So after doing weeks of research lots of youtube videos for and against, I have decided to go the route of investing $3k into where the market currently is. Gives me a better chance to see it from an inside perspective rather than speculate. Plus if one day, CryptoCurrencies completely replace the paper currency of the US (not money due to no gold standard since 1971).

The giant company was relatively quick to get into cryptocurrency, announcing the establishment of a cryptocurrency exchange, GMO Wallet, at the beginning of 2017.

It launched a blockchain development service for customers in July, and a Bitcoin mining operation in September.

At the time, the company said: “We believe that cryptocurrencies will develop into ‘new universal currencies’ available for use by anyone from any country or region to freely exchange ‘value,’ creating a ‘new borderless economic zone.”

In keeping with this national enthusiasm for digital money, the company stated in a press release today: “GMO Internet Group has decided to introduce a system that allows part of the salary’s payment to be received by Bitcoin in order to promote ownership of the [employees’] virtual currency.”

Needless to say, such a massive company deciding to pay employees in Bitcoin is a major step for digital money.

Report back when I can get FDIC backed Bitcoin accounts to store my crap in. None of the Bitcoin infrastructure has ever been tested against a bank run. Well, actually Mt. Gox did and it failed miserably.

FDIC does not insure against fraud though (which is what the discussion was about). I agree that FDIC insurance would be valuable in the event of institutional insolvency. But, again, that is not a critique against bitcoin, that's a critique against the institutions around it. We may very well see a day where FDIC/NCUA type insurances are extended to bitcoin accounts as well.

FDIC doesn't protect against fraud. It does protect against the institution going bankrupt. The institution protects against fraud. Therefore, if the fraud was bad enough that the institution became insolvent FDIC would step in to reimburse depositors.

I don't see bitcoin getting FDIC insurance or anything similar. SIPC, which protects investment accounts, has already said they will not reimburse stolen bitcoins. They also have ponzi scheme and fraud alerts on bitcoin, but that's another conversation. FDIC and SIPC have strings attached. Banks and investment firms have know your customer laws, anti-money laundering laws, and suspicious transaction reports. I highly doubt any government would extend the same protection to bitcoin when bitcoin's appeal is that it gets around those laws.

If we are going to keep calling bitcoin a currency I have an important question. Is anyone using it to buy things? I hear about companies accepting it, but does anyone actually use it? I know there are illegal transactions it is used for, but it's current price can only be justified if people think it will go mainstream. Is it being used for regular legal transactions? I imagine there are a few, but do we have any data on how frequently?

Transaction fees: I've read in multiple places of late that a transaction can take a week unless you pay $20 for priority processing. I thought bitcoin was supposed to be faster and cheaper. $20 for a same day transaction... that's the international wire fee at many major banks. Credit card and ACH transactions, what bitcoin should be competing against, clear much faster and much cheaper.

I've heard about how it is easier for international transfers, but I know someone who tried to do that and the receiving company would only do the transaction if the buyer insured the bitcoin against market fluctuations. They didn't want to agree to $200k in bitcoins and then have the bitcoins drop in value to $160k before they could sell them. The buyer didn't want to insure the bitcoin either, too much risk. They opted for a bank wire transfer. Fee was probably $20...

If we are going to keep calling bitcoin a currency I have an important question. Is anyone using it to buy things?

No, not really. Aside from drug/child prostitute related uses, there's really only disadvantage for most people and companies in attempting to use bitcoin as a currency at the moment. Data regarding frequency of uses of bitcoin to buy things is never going to be available because there's no record kept of what a bitcoin transaction is actually for.

Transaction fees: I've read in multiple places of late that a transaction can take a week unless you pay $20 for priority processing. I thought bitcoin was supposed to be faster and cheaper. $20 for a same day transaction... that's the international wire fee at many major banks. Credit card and ACH transactions, what bitcoin should be competing against, clear much faster and much cheaper.

I've heard about how it is easier for international transfers, but I know someone who tried to do that and the receiving company would only do the transaction if the buyer insured the bitcoin against market fluctuations. They didn't want to agree to $200k in bitcoins and then have the bitcoins drop in value to $160k before they could sell them. The buyer didn't want to insure the bitcoin either, too much risk. They opted for a bank wire transfer. Fee was probably $20...

The behaviour you're describing is caused by the design of bitcoin. The blockchain is the permanent record of all bitcoin transactions. When you 'spend' a bitcoin, you say 'I want to transfer this bitcoin to XXX'. Then you have to pay a fee and wait for this to be recorded on the blockchain.

Just including this information in a block on the blockchain isn't enough to guarantee that the transaction has been made (on average several times a day a single block from the blockchain becomes orphaned - which means that the record of transactions might not actually be kept). Each block produced after the block that contains your transaction makes it less likely that your transaction will be orphaned and forgotten. The current standard with bitcoin is to wait for at least six blocks after the transaction (so 7 blocks total) before you consider the transaction confirmed. It is an average of 10 minutes per block to complete, but this number can grow or shrink depending on the hash power of the Bitcoin network.

A block handles about 2500 transactions. I mentioned that you have to pay a fee to include your transaction in a block. If you pay a bigger fee, you get higher in the queue to have your transaction happen. If there are more transactions taking place than can fit in a single block, then you can choose to wait for the next block (or maybe the next block after that, or after that, etc.) for a lower price. Bitcoin has recently become popular, so there are longer queues for transactions . . . so if you want to complete your transaction more quickly you have to shell out lots of money or you have to wait a long time.

I found this article "HOW TO MAKE A MINT: THE CRYPTOGRAPHY OF ANONYMOUS ELECTRONIC CASH" written by the NSA in 1996. It makes me question the who and why behind its creation.

I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.

I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.

NSA had backdoor access (private key) to the early cryptography that was sold and used by businesses. This issue actually still prevails in today's infrastructure: (example) google controls the master key for gmail. Of course, blockchain with zero-proof resolves this (decentralized messaging), which would allow greater security for trade secrets.

I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.

NSA had backdoor access (private key) to the early cryptography that was sold and used by businesses. This issue actually still prevails in today's infrastructure: (example) google controls the master key for gmail. Of course, blockchain with zero-proof resolves this (decentralized messaging), which would allow greater security for trade secrets.

I am not a crypto expert, but I don't think this response makes much sense. First of all because it doesn't seem to apply to anything we were talking about.

Secondly, Google knows about the contents of your GMail not because of any secret cryto backdoor, but because you are sending them unencrypted emails that they store in their database on their servers. You are using their application, of course they can look at it and see what's in it. You don't want them to? Okay, then pre-encrypt your message and copy the encrypted nonsense blob into GMail. Now they can't read it. They can still see the blob, but they won't understand what it says.

It is also reasonably suspected that they have unknown-to-the-public tricks that weaken several others. And that's part of the point, they know more than anyone else. They are a thousand times smarter and sneakier than you and I put together. So it's almost literally impossible to tell what they can do and what is just rumor.

Blockchain / cryptocurrencies are no more immune than their underlying cryto algorithms. Certainly not from decentralized messaging, that's a minor speed bump to them not a roadblock. And as a non-crypto-expert it's not clear to me what zero-knowledge proofs have to do with anything. Nor does zero-knowledge proofs have anything really to do with decentralized messaging.

All that being said, just because the NSA published a paper 20 years ago that laid some of the groundwork for cryptocurrencies means nothing about the security or vulnerability of blockchain / cryptocurrencies. The NSA also has an interest in making sure strong crypto works so that no one else can spy on them. And banks don't want people to be able to steal from them, and software companies don't want to be at fault if software they sell to their customers ends up getting them hacked, etc. So there is a lot of work that goes into making sure that crypo algorithms actually are working as advertised, and presumably blockchain / cryptocurrencies would be using the best-available algorithms, not known-weak ones.

I could be wrong about everything and it could be that you know way more about this than I do, but I would caution people in general about just throwing around jargon and pretending it's a magic solution to a problem. Crypto is really hard and there are probably only tens of people worldwide who actually really truly know what they're talking about. If you're not one of them you basically have to trust that they're not missing something. But at the same time I don't have any reason to suspect that blockchain / cryptocurrencies are vulnerable to anything, and that article should not make anyone suspicious of anything either.

Edit: This is also why the FBI and anyone else who complains about why the government should have backdoors into crypto algorithms "for national security reasons" should be boo'd out of office. There is no such thing as a backdoor that only the "good guys" can use. Either crypto is strong and your bank transactions are secure and your blockchain works and your private messages are private and the website you are visiting is actually the real website it says it is, or it's not and it's only a matter of time before the "bad guys" figure out how to break it (if they havn't already). There is no in-between. Support politicians who support real crypto, literally the entire internet depends on it.

I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.

NSA had backdoor access (private key) to the early cryptography that was sold and used by businesses. This issue actually still prevails in today's infrastructure: (example) google controls the master key for gmail. Of course, blockchain with zero-proof resolves this (decentralized messaging), which would allow greater security for trade secrets.

I am not a crypto expert, but I don't think this response makes much sense. First of all because it doesn't seem to apply to anything we were talking about.

My post was a general statement acknowledging yours, saying that yes, the NSA was and are highly involved with cryptography; yes, they have a history with it. I think we're both coming from different frames of reference.

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Secondly, Google knows about the contents of your GMail not because of any secret cryto backdoor, but because you are sending them unencrypted emails that they store in their database on their servers. You are using their application, of course they can look at it and see what's in it. You don't want them to? Okay, then pre-encrypt your message and copy the encrypted nonsense blob into GMail. Now they can't read it. They can still see the blob, but they won't understand what it says.

You're using their service, so yes, they have access to all your activities; your gmail is encrypted within their service; gmail to gmail is encrypted but not outside of that (though are workarounds but that requires the receiver a way to decrypt what you encrypted). I'm using them as an example to illustrate the lack of transaction or communications medium that offer greater privacy protection where it would be needed (political activists or journalists or where someone simply wants to use email services without their data being scanned and collected for advertising purposes).

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Blockchain / cryptocurrencies are no more immune than their underlying cryto algorithms. Certainly not from decentralized messaging, that's a minor speed bump to them not a roadblock. And as a non-crypto-expert it's not clear to me what zero-knowledge proofs have to do with anything. Nor does zero-knowledge proofs have anything really to do with decentralized messaging.

Most blockchains right now only offer public-private key functionality at the endpoint, and not between transactions. Zero-knowledge allows encryption between transactions. If we're able to build email or messaging protocol on top of these endpoints in zero-knowledge environments, now we have true decentralized email. It can offer other use-cases where businesses can transact without revealing trade secrets, yet are able to guarantee certain work has been performed. Zero-knowledge and variant tech allows mathematical expression stating that yes, you're the owner of the private key, you can prove it without exposing what the private key is.

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All that being said, just because the NSA published a paper 20 years ago that laid some of the groundwork for cryptocurrencies means nothing about the security or vulnerability of blockchain / cryptocurrencies. The NSA also has an interest in making sure strong crypto works so that no one else can spy on them. And banks don't want people to be able to steal from them, and software companies don't want to be at fault if software they sell to their customers ends up getting them hacked, etc. So there is a lot of work that goes into making sure that crypo algorithms actually are working as advertised, and presumably blockchain / cryptocurrencies would be using the best-available algorithms, not known-weak ones.

I could be wrong about everything and it could be that you know way more about this than I do, but I would caution people in general about just throwing around jargon and pretending it's a magic solution to a problem. Crypto is really hard and there are probably only tens of people worldwide who actually really truly know what they're talking about. If you're not one of them you basically have to trust that they're not missing something. But at the same time I don't have any reason to suspect that blockchain / cryptocurrencies are vulnerable to anything, and that article should not make anyone suspicious of anything either.

I'm not suspicious of blockchain. My earlier reference about nsa backdoor never meant to imply an nsa backdoor into blockchain. I don't consider myself an expert on cryptography at all; my knowledge stems from a university network security class, where we learned about Bob and Alice and performed some cryptographic calculations, and where I also had to write a paper on cryptography; and years of blockchain interest. I consider myself to have an enthusiast knowledge.

Adding to what I said earlier: I'm excited about blockchain because it represents a new form of digital communication; it effectively resolves a network protocol issue (byzantine general's problem, which was once thought to be unsolvable). The decentralized aspect makes it extremely difficult or impractical to be backdoored.

I just wanted to add some info to the discussion about "backdoors" with regard to bitcoin.

The only way anyone can ever spend bitcoin that you own is to be able to sign a transaction from an UTXO using the associated private key. Even if proof-of-work were compromised (51% attack), they would still need to be able to compose and sign a transaction with the private key associated with a UTXO. If you're not reusing bitcoin addresses after spending from them (which you shouldn't be), then you shouldn't have to worry about double spending in the event of a (highly unlikely) 51% attack and you also won't have to worry about your public keys being exposed for bitcoin addresses that still contain funds.

The question then becomes, how well is your private key protected from attack, given a known bitcoin address? To understand that, you have to understand how bitcoin addresses are composed.

Bitcoin addresses are made up of the public key that is first hashed with SHA256 and then it is hashed with RIPEMD160. That result is then hashed twice with SHA256 and the first 4-bytes are used as a checksum and appended to the previous RIPEMD160 hash. This checksum prevents people from mistyping in a bitcoin address and sending bitcoin to an invalid address where it would be permanently lost. A version number is prefixed to this payload and then the prefix+RIPEMD160hash+checksum is then run through Base58check encoding. This encoding is the same type of encoding as Base64 encoding except it omits several characters such as "O,0,I,l" so that bitcoin addresses avoid characters that are difficult to determine when various fonts are used to display them.

It is a pretty clever use of hashing and encoding to not only provide security for the public key being used, but to also make it easy for people to type in bitcoin addresses and not worry about making a mistake and losing funds.

One of the important things to understand about this is that because the public key is hashed twice with two different hashing algorithms, there would need to be a significant compromise in both of those algorithms (SHA256 and RIPEMD160) in order to lead to a compromise in the actual underlying public key used for that bitcoin address. If you aren't able to determine what the public key is, then it is impossible to determine what the private key is for that bitcoin address as well. If you can't determine the private key, then there is no way for anyone to be able to spend any of the funds that are sent to that bitcoin address.

This is why bitcoin is such a secure method of transacting. Because it is a push mechanism for conducting transactions and because of the techniques that are used for protecting that push mechanism (digital signatures+hashing), it makes it nearly impossible for a set of circumstances to arise that would lead to a fundamental compromise in the way that private/public keys are secured.

This is why it comes down to: protect your private key and your funds are most assuredly protected. Without your private or public key, there really isn't any way for anyone to compromise it otherwise. The idea that anyone would have a "backdoor" in any of this is completely unfounded.

If it's not a bubble, why am I getting ads on the MMM forum for a free crypto masterclass from this dork? ;)

Because he knows it's a bubble, and doesn't dare touch it with his own money.

Just like every other get-rich-quick internet "Guru," he'll rack up profits "teaching" you how to do something he never even heard of until last week.

His bread is buttered by suckers, rather than by practicing what he preaches.

I'll bet you a ten-spot to a doughnut that his, "free Masterclass," is nothing more than a long list of glowing testimonials and a standard marketing pitch for his, "Super Duper Double Top Secret Advanced Class," for "only"$597 $297, marked down just for those who order today.

If it is so safe, why is it constantly getting hacked? (And yes, intermediaries/wallets are parts of the system too.)

If it's not a bubble, why does it look like every other bubble?

If it's not a bubble, what is the fair market value of one coin? What would cause that to change? At what price would you sell everything tomorrow?

How much would you pay for value that can be moved anywhere in the world with a low fee, fast speed and is completely permission-less and immune to censorship and seizure? There is nothing like that currently in place, the only comparison can be Gold but Gold is incredibly difficult to move and store.

If it is so safe, why is it constantly getting hacked? (And yes, intermediaries/wallets are parts of the system too.)

No, Bitcoin isn't constantly getting hacked and no, intermediaries and wallets are not a part of the system. That's like saying that the internet is getting hacked because of some schmuck's Wordpress website was hacked because they were using an outdated version. There is no more obligation to using any given service or wallet in order to use Bitcoin as there is to running Wordpress for a website.

Wallets and intermediaries are services built on top of Bitcoin, they're not Bitcoin. When choosing to use Bitcoin, you can choose to use various services and wallets and your decision to use any given service will be based on your own risk assessment as to whether or not you want to expose yourself to any of those services and tools that are built on top of Bitcoin. All these services are aimed at providing additional ease of use and features above and beyond what bitcoin provides. It goes without saying that any additional complexity beyond the Bitcoin protocol itself will add security risks just like any of the myriad application services that are built on top of any of the base layer protocols that make up the internet adds security risks. It pays to do proper research into the various applications built on top of Bitcoin and the security risks associated with them. If you want the ultimate level of security, then running a full Bitcoin node gets you as close to the Bitcoin blockchain as you can get.

The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0. No other historical bubble came from a starting price of $0. They were all established markets that became greatly skewed and out of balance for various reasons. This is why they were bubbles because of the fact that their rise above the previous market equilibrium was so extraordinary. Bitcoin also has a completely restricted supply that has no means of reacting to demand, unlike every other bubble on that list.

That is probably a better way at historically looking at the price of bitcoin given the fact that it was a bootstrapped currency that originated from a starting price of $0. How else in the world would you expect a restricted supply currency to become widely used without it going parabolic on a linear scale? Even if that adoption took place over the course of several decades (which is unlikely for digital technology), it would still look parabolic given the kind of drastic value differences in the starting and end points at hand.

How much would you pay for value that can be moved anywhere in the world with a low fee, fast speed and is completely permission-less and immune to censorship and seizure? There is nothing like that currently in place, the only comparison can be Gold but Gold is incredibly difficult to move and store.

The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0. No other historical bubble came from a starting price of $0. They were all established markets that became greatly skewed and out of balance for various reasons. This is why they were bubbles because of the fact that their rise above the previous market equilibrium was so extraordinary. Bitcoin also has a completely restricted supply that has no means of reacting to demand, unlike every other bubble on that list.

That is probably a better way at historically looking at the price of bitcoin given the fact that it was a bootstrapped currency that originated from a starting price of $0. How else in the world would you expect a restricted supply currency to become widely used without it going parabolic on a linear scale? Even if that adoption took place over the course of several decades (which is unlikely for digital technology), it would still look parabolic given the kind of drastic value differences in the starting and end points at hand.

I guess we're not counting the pre-bubble phase of bitcoin from 2009 to mid 2013, and the 2014 buildup and drop.